For our latest Expert Interview, we had the opportunity to speak to Eran Polack, CEO and Co-Founder of HAP Investments. Eran is a well-recognized entrepreneur with a long, successful career in the real estate industry even before moving to the United States in 2011. A native Israeli, he had multiple successful ventures in Israel as well as throughout Eastern Europe. In 1998, together with partners Amir Hasid and Nir Amsel, Eran founded HAP Investments, an international, full-service real estate development company headquartered in New York. Its main focus is identifying and investing in strategically situated projects, usually in emerging and prime markets in the New York metro area.
Read on to find out more about Eran Polack’s journey through the real estate industry, as well as his insights on opportunity zones, investment opportunities and other things to keep an eye out for in 2019.
Q: Tell us a little bit about your background and why you chose a career in real estate development.
I’m originally from Israel, and while I was living there, I bought my first apartment, renovated it and rented it out. It was a great time for real estate, and this jump-started my passion for the business. I enjoyed real estate so much that I started to seek out opportunities to buy property in Eastern Europe and Budapest.
Q: What drove you to start investing and developing in NY after such a long and successful career in Europe?
My business partners and I had worked in real estate for 25 years and had grown into the industry slowly. We came to the U.S. in 2011 after the economic downturn, and we determined that New York was the best place to invest in and build something for future generations. The opportunity was there because land in certain neighborhoods was relatively affordable and there was a large pool of talent looking for new employment opportunities. This allowed us to buy property in strategic locations and to hire the staff we needed to execute our vision.
When we came to New York, we created an organization not just to be entrepreneurial or to focus only on the current project we were investing in, but a development company that would build numerous projects over the long-term.
Q: Where do you stand on opportunity zones going into 2019?
HAP Investments is bullish on the prospect of Qualified Opportunity Zones in New York City, and we believe real estate developers should not underestimate the tax benefits that these zones provide. If you hold on to the asset for ten years, no tax is assessed on your capital gains. Those savings can be reinvested into making a truly outstanding product.
We are most excited about the Opportunity Zone areas that we already have experience in — Washington Heights and Fort George. The area around Columbia University Medical Center is booming and tax benefits are a huge added incentive that should attract new growth there.
Q: What markets should we keep an eye out for in the following months for investment opportunities?
Land has always been expensive in Manhattan, but recently it’s become prohibitively so. Even Brooklyn is becoming extremely difficult to develop. We have started looking for affordable land farther afield, away from the densely populated centers of the five boroughs. We have been looking into the eastern areas of the Bronx, Yonkers and other parts of Westchester. With land prices as they stand, we believe we may see better return on investment for projects outside the city center.
Q: What development trends have you noticed in the market during the last months of 2018? Where do you see the market heading for the rest of the year?
We expect the 2019 real estate market to be governed by a glut of new multifamily and residential properties and a dearth of rental assets. There are very few new rental projects under construction in New York City right now, and that means that in two to three years there will be a shortage in product and rent prices are going to rise. We think developers should look to build or pivot to rental projects wherever they see a market void.
Q: Tell us a little bit about some of HAP’s current development projects.
We have two exciting residential developments in prime Downtown Manhattan neighborhoods — a project in Chelsea located at 215 & 225 West 28th Street, for a planned 20-story luxury rental and condominium development; and we are developing 65 Franklin Street, a 19-story luxury residential building in Tribeca. Both projects will be distinctive and boast a full suite of amenities.
In Uptown Manhattan we are developing a rental building at 4452 Broadway on the corner of 190th Street in Washington Heights, and another rental building at 249 East 117th Street in East Harlem.
Outside of Manhattan, we have our property at 500 Summit Avenue, a planned 42-story luxury rental tower with sweeping views of the New York City skyline and convenient access to the PATH train into downtown Manhattan.